The exercise of powers under Section 41(1) of the Punjab VAT Act, 2005 requires certain pre-requisites to be satisfied, and the authorities' satisfaction regarding adverse effect on revenue must be justified with material on record.

Rajesh Bindal, J.

1. The petitioner has filed the present petition praying for issuance of a writ in the nature of mandamus directing the respondents to issue refund voucher for Rs. 1,57,93,514, found to be refundable by the Assessing Authority while framing assessment vide order dated January 15, 2007.

2. Briefly the facts, as stated in the petition, are that the petitioner is a private limited company engaged in the business of manufacture of acrylic yarn made from the acrylic fibre, purchased from another unit, which is an exempted unit under the provisions of Section 30A of the Punjab General Sales Tax Act, 1948 (for short, "the 1948 Act"). The petitioner is also an exempted unit having been granted exemption certificate No. 314 dated May 2, 2001 for an amount of Rs. 9,69,97,717 with validity from September 15, 2000 to September 14, 2007. While framing the assessment for the year 2005-06, keeping in view the judgment of this court in Civil Writ Petition No. 2272 of 2006 (Perfect Synthetics v. State of Punjab) decided on July 4, 2006 Reported at [2007] 6 VST 280, the Assessing Authority, vide order dated January 15, 2007, determined a sum of Rs. 1,57,93,514 as being refundable to the petitioner, on filing of proper application. It was further mentioned in the order of assessment that special leave petition having been filed by the State of Punjab against the judgment of this court in Perfect Synthetics case (Civil Writ Petition No. 2272 of 2006 decided on July 4, 2006 Reported at [2007] 6 VST 280.), the refund shall be subject to decision of special leave petition and the amount so refunded shall be recoverable with interest, in case the judgment of this court is reversed by the honourable Supreme Court. The petitioner applied for refund of the amount due to him but the same was not granted.

3. In response to the notice of writ petition, the respondents have filed a short affidavit admitting that a refund of Rs. 1,57,93,514 has been determined vide assessment order dated January 15, 2007. However, in view of the order passed by the Excise and Taxation Commissioner, Punjab, under Section 41(1) of the Punjab VAT Act, 2005 (for short, "the VAT Act"), the refund has been withheld. Copy of the order has been placed on record as annexure R-3. The relevant part thereof is extracted below:

I have considered the facts and also perused the record of the case in the light of Section 41(1) of the Punjab VAT Act. The Section 41(1) of PVAT Act reads as under: 41. (1) Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the officer competent to grant such refund is of the opinion that the grant of the refund is likely to adversely affect the Revenue, such officer may, with the previous approval of the Commissioner, withhold the refund till such time, as may be determined.

In the present case the refund has arisen for the reason that deduction under Rule 29(xii) of the Punjab General Sales Tax Rules, 1949 has been allowed in respect of goods purchased from exempted units for use of manufacture. This has been done complying with the order of the honourable Punjab and Haryana High Court in C.W.P. No. 2272 of 2006 in the case of Perfect Synthetics Reported at [2007] 6 VST 280. The department has filed special leave petition before the honourable Supreme Court of India and notices have already been issued to the respondents including the present dealer, M/s. Shiwalya Spinning & Weaving Mills (P) Ltd., who had also filed caveat. Therefore, the order which has given rise to refund is subject-matter of appeal by way of special leave petition. Prayer for stay of the operation of the order dated July 4, 2006 passed by the honourable Punjab and Haryana High Court in C.W.P. No. 2272 of 2006 Reported at [2007] 6 VST 280 has also been made. The revenue involved in the case is substantial. The Assistant Excise and Taxation Commissioner-1 has r